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A quick online search will yield countless studies comparing millennials and the young professionals of Gen Z who are coming of age and entering the marketplace. Under scrutiny is every aspect of their lifestyle—from their views on gender and technology to their coffee consumption. But despite the gaps, an overlap is emerging. While millennials favored apartment dwelling at the onset of their careers, many now set their sights on purchasing a home in the suburban areas they once shunned. Gen Zers are one step ahead, with 52% socking away savings to buy a home. According to research, to fulfill their shared dream, 75% of Gen Zers and 69% of millennials indicated they would consider moving to a new state, relocating to a less attractive but more inexpensive neighborhood, or purchasing a fixer-upper at a bargain. Both cohorts, however, face the same financial hurdles. According to respondents in a Bankrate poll, affordability is the most significant barrier. Over the past two years, the housing market has exploded. Increasing demand has caused property prices to surge at a record-breaking rate, up nearly 34% since the start of the Covid-19 epidemic—a daunting reality exacerbated by student loan debt and stagnant incomes.
Despite the odds, Gen Zers, noted for their practicality, are focusing on housing in more affordable states. Like their older and now wiser millennial counterparts, increasingly, they are choosing Florida, not only for lower costs but given the high demand for both purchased and rented properties, their housing investment will provide a robust return.
Why Are Gen Z Choosing Properties in Florida?
For Generation Z, Florida is their top pick, followed by Texas and California. In addition to property price trends and employment markets, these savvy young professionals are drawn to the state. Gen Z homeowners seek a better social environment and a deeper connection to nature—abundant in the sunshine state.
Low Mortgage Rates
Housing prices in Florida remain the hottest in the above-average national average even as they keep flat elsewhere. The fact that home values are appreciating is a positive sign for the U.S. economy. It shows that people are confident enough in the real estate market even though the economy is slowing down. The rise in Florida home values is especially significant because the state was hit hard by the hurricane recently. The combination of the still-strong economy and low taxes is helping to drive up home values in the state. If the trend continues, we could see home values in Florida continue to rise at a faster rate than the rest of the country. Besides, obtaining a mortgage is among the simplest methods to purchase a property in Florida.
While financing property was more straightforward for previous generations, we should consider the resourfullnes of the Gen Zers. As Maximiliano Lemura, the CEO of Tropical Parcells LLC, explains, “seeing opportunity is a step toward seizing the opportunity. More potential buyers among millennials and Gen Zers are waking up to the possibility of home ownership in Florida. While perhaps this dream is beyond their reach in major cities, they recognize that home ownership is attainable in Florida. Besides, Gen Zers are very smart in terms of internet research and can find real estate options other generations cannot access. Most of our clients and Millenials and Gen Zers, as a result, our website attracts lots of young investors.”
How to get real estate at a fraction of the market price
Although the home price has increased over the previous year, the cost of purchasing a home in Florida is still among the lowest. Buyers may find some jaw-dropping deals, properties for pennies less than 30 min away from the Atlantic Ocean. With the high demand for both purchased and rented properties, Florida outshines other states for established and first-time investors. According to Maximiliano Lemura, “We are focused on affordable and enjoyable properties. Therefore, keeping costs down and affordability is a priority for our team when we scout for properties. It all starts with the land. Many times people need to realize just how much the cost of the land is priced into purchasing a home. Not only does starting with the raw land keep costs lower, but our in-house owner financing, it makes it much more accessible to people who would otherwise have restraints due to poor credit or lack of cash.
Therefore, private companies such as Tropical Parcells LLC can get people into a nice middle-class neighborhood with as little as $500 down and monthly payments that emulate a car payment. “The $500 monthly payment suppose to be normal for the real estate market,” says Maximiliano Lemura. Everyone should be able to own land or a house in the United States. “There is plenty of land for everyone in our amazing country,” continues Lemura. “The typical builder will add 20-30% on top of everything, plus the land reseller will add, the designer will add, landscaper, etc. These factors add up so quickly purchasing a home is unaffordable for most. We see many young people gravitating towards modular and container homes, which are far less costly. Believe it or not, sometimes you can not even tell the difference between some of these modular/container homes and an on-site build when just looking at it, and you end up having your own house 15-20 min away from the ocean at a fraction of the cost…in the best all year round summer climate, that’s magical” continues Lemura.
Tax Laws
Further enhancing its attraction, Florida provides juicy tax breaks for investors and residents. For example, Floridians pay no state income tax, a benefit protected by its constitution. As for investors, the state does not impose taxes on partnerships and sole proprietorships.
Climate
Florida’s climate—great weather and social environment—also attract newcomers to the state. Of course, age differences come into play here as well. Gen X renters ranked closeness to the great outdoors as their third-most significant feature with a lively social scene as their second-most important consideration. These preferences reflect their dual nature: Gen Zers balance work and play. Committed to their jobs, they are equally committed to enjoying their free time.
Lifestyle Change
Although millennials may make up most of the current homebuyers, Gen Zers have lower purchasing power. Many members of Generation Z are presently finishing their college degrees and experiencing financial hardship due to inflation and the growing cost of living.
Although most Gen Zers are currently renting, this generation desires to buy their own house. Generation Z is known for being thrifty and is now beginning to save for their own homes.
According to Lemura “Young people are finding new and clever ways to keep their monthly expenses low. Besides trying to make money on the property. Many people use their homes as investments and rentals as supplemental income. Many are beginning to recognize that with a modest investment, they not only purchase property but open opportunities for passive income. The use of companies like Airbnb and VRBO allow people to rent a room in their house or entire property to help pay off their mortgage. We even see many people build in-law suites so they do not share the same space with the guest. Florida has always been a very lucrative area regarding short-term rentals because of our climate and beautiful beaches..”
Opportunities
Confirming this perspective, numbers prove that Gen Z are being drawn to the state by job development, making it a desirable location to relocate. Additionally, Florida’s jobless rate has been below the national average for 11 consecutive months. This economic reality creates a pool of renters for these new property owners. And while Florida continues to add jobs, so too have increased opportunities for rental and resale.
Takeaway
Florida is the exception, with much of the US becoming increasingly inaccessible for young property buyers. Here in the sunshine state, they can invest their hard-earned dollars to purchase property to rent, resale, or enjoy as a young family for decades to come.
Tropical Parcels LLC has made investing in land in Florida achievable, with financing options available even without a credit check. This means that Gen Z, who are just entering the job market and do not have a credit history, can buy land for cheap.
Photo by Ralph (Ravi) Kayden on Unsplash